Will Saudi crown prince’s Asian tour squeeze Iran out?

Saudi investments in India and Pakistan are likely to close many of Iran’s economic avenues with the two countries as well as with China.

Monday 25/02/2019

A police officer walks around during an inauguration ceremony of new equipment and infrastructure at Shahid Beheshti Port in the southeastern Iranian coastal city of Chabahar, on the Gulf of Oman, on February 25, 2019. (AFP)

Angry Iranian statements about the Saudi royal’s visit to Islamabad show Tehran’s concerns regarding Saudi economic and political cooperation with the three countries, which could worsen Iran’s economic isolation.

Crown Prince Mohammed’s visit to Pakistan, which ended February 19, resulted in the signing of five agreements and memoranda of understanding worth $18.5 billion in projects in oil refining, renewable energy, petrochemicals and mining.

Iran was a topic heavily present in New Delhi and Beijing, especially considering the competition between Pakistan and Iran to develop ports connecting Central Asian countries with an outlet on the Arabian Sea.

Analysts said the Saudi crown prince’s visit to Pakistan further distanced that country from Iran, its neighbour to the west, through investments in the construction of a giant oil refinery at Gwadar port, which is likely to undermine development of the Iranian port of Chabahar.

The two ports, located on the border between the two countries, are only separated by a short distance. Both ports aim for serve identical functions.

New Delhi will likely rethink its help to develop the Iranian port if it wants to attract more rewarding investment from Saudi Arabia, especially with increasing pressure from the United States.

In addition to being an ideal alternative to Chabahar for Central Asian countries, Gwadar is the Pakistani gateway for China’s Belt and Road Initiative, through which Beijing is seeking an outlet to the Arabian Sea and in which it is investing more than $60 billion.

The Iranian fears were obvious in statements attacking Pakistan during Crown Prince Mohammed’s visit, painting it as a Saudi ally against Tehran. Pakistan fears that Indian support for the Chabahar port will enable New Delhi to establish closer economic and political ties with Iran, Afghanistan and Central Asian countries.

This shows that Saudi investments in India and Pakistan are likely to close many of Iran’s economic avenues with the two countries as well as with China. It is betting on the Pakistani corridor as one of the main axes for its initiative to revive the historic Silk Road.

The reasons encouraging Beijing to distance itself from Tehran are mounting due to increasingly large interests with Saudi Arabia. Beijing could also sacrifice its ties with Tehran to ease the trade war raging between China and the United States.

Crown Prince Mohammed’s visits to the three countries could prove to be a severe blow to Tehran’s hopes to gain a $5 billion windfall from Afghan trade through Chabahar and maybe more from trade with Central Asian countries.

Saudi investments could also ease tensions between India and Pakistan by curtailing economic conflicts of interests stemming from New Delhi’s support of the Iranian port.

Analysts said Saudi investments in India and Pakistan and its boosting of economic ties with China would provide Riyadh with an important card with which it can counter pressures from the US Congress.

Observers agreed that Indian, Chinese and Pakistani interests with Saudi Arabia were much more important than any risk-fraught relations with Iran, which is struggling under a crippled economy as well as of US restrictions on economic and trade ties with Tehran.